QUESTION: How has the stock market’s precipitous plunge affected college endowments, especially the titanic ones, e.g. Harvard and Yale? Will it affect their scholarship programs — many of which are generous and new?

Or did Harvard’s legendary money managers somehow manage to beat the market again?

If I worked at a newspaper or financial news website I would assign this story right now. But I don’t, so I’ll just blog it here.

Wachovia Bank has frozen the accounts of nearly 1,000 colleges, leaving institutions unable to access billions of dollars they depend on for salaries, campus construction, and debt payments.

The move could cause other ripples, as Moody’s Investors Service announced it would review the credit impact of the bank’s decision on the many rated institutions participating in Wachovia’s short-term investment fund.

The freeze has some colleges worried that they won’t be able to make payroll this period, said Verne O. Sedlacek, president and chief executive of Commonfund, which manages investments for nonprofit institutions and directed colleges’ money to the Wachovia fund. Many colleges use the bank’s short-term investment fund for operating expenses, “almost as a checking account,” he said.

As of late last month, Wachovia managed approximately $9.3-billion in assets for 900 colleges and about 100 private schools through its Common Fund for Short-Term Investments…

The Wachovia freeze could have the biggest effect on smaller institutions like Bethany College, in Kansas, which has $700,000 invested in the fund. President Edward F. Leonard III said his institution has enough money to cover costs for now because students just paid tuition, but he is worried about the second semester, when the college typically dips into its short-term funds to pay for a variety of operating expenses.

“All colleges ride a cash roller coaster,” he said. “But the smaller colleges, like Bethany, we feel those bumps more than others do.”

After the bank froze its assets, Mr. Leonard wrote to his congressman, Rep. Jerry Moran, a Republican, to urge him to support federal legislation intended to rescue the financial sector. Mr. Moran voted against the $700-billion bailout bill, which had been backed by the Bush administration.

“I just e-mailed his legislative assistant saying, ‘Hey, it’s starting to hit home,'” he said. “If you think this is something confined to New York City and Washington, D.C., it’s already hit one of your campuses in Kansas.”